Archive for the ‘Strategic HR Management’ Category

In 1997 McKinsey conducted it’s ’war for talent’ research and since that time little has changed – it has never ended (Gutheridge, Komm & Lawson, 2008, p.49). It has been very difficult for companies to gain and retain top quality people (Heron, 2009, p.1). This has not slowed during the economic crisis, the top 10% of talent are still mobile (Donaldson, 2009) and this will accelerate when the good times return. Cappelli’s article is therefore timely in giving HR and Line Managers a process that can assist in talent management.

The main premise of the article is that talent management is ‘anticipating the need for human capital and then setting out a plan to meet it’ (Cappelli, 2008, p.1). The options for companies are to either do nothing or use 1950’s programs of succession planning and forecasting. Cappelli suggests that there is another, more effective way using a just-in-time concept (2008, p. 3-4) that includes:
• Make and buy to manage risk – talent is expensive to have waiting in the business and they will leave without opportunities. Therefore some roles can be sourced externally more effectively, while others could be internally.
• Adapt to the uncertainty in talent demand – the concept is to break up development programs for staff into smaller units so that staff complete the course over a longer period ie 3 years and this keeps them interested longer.
• Improve the return on investment in developing employees – get staff to part pay towards a course, whether this is financial or in time.
• Preserve the investment by balancing employee-employer interests – allow staff to apply for any internal job and make it easy for them to apply.

Cappelli concludes that by using a just-in-time concept and getting more engagement with talent through extended training, financial or time commitment and allowing staff to apply and move across the organisation that you can retain talent more effectively than using traditional systems.

Musselwhite (2007) writing for Talent Magazine noted that it is cheaper to develop and retain staff than to buy in new staff. In Ready and Conger’s 2007 article for Harvard Business Review they state that some organisations and managers still believe that they can find talent by buying staff (p.1). They disagree. This is in contrast to Cappelli who says that this is an old philosophy and that talented staff won’t wait ‘on the bench’ (p.3) for an opportunity, but will leave. He counsels that a balance is required to hire outside when necessary and promote from within if there is a talent available (p.4).

Training is important to retain top talent. Research reviewed by Deerly (Victoria University, 2008) found that there is a link between retain and training quality and satisfaction. However in Cappelli (p.4) there is research that says that people tend to leave organisations after training. Therefore Cappelli has developed the concept of extending training over a prolonged period to continue with engagement.

The area of strategic talent management that Cappelli has not reviewed in his article is that of other staff outside the top 10-20 staff and how to ensure that the organisation continues to engage with this staff. Guthridge et al (2008 p. 54-55) say that managers also need to focus on the B-team players as well as the top talent. It is important that companies do not neglect these people (p.55) and look at ways to ensure that they are valued to create a vibrant environment for all staff across the organisation. Ready and Conger also recommend that in managing staff that haven’t made it into the top talent pool is very important. They recommend that you frame the conversation around that they require ‘development and support’ (2007, p.3). This could help to reduce potential turnover from this group outside of the top talent in the organisation.

Regardless of the various theories proposed the reality is that 59% of all businesses in Australia believe it is important to retain skilled employees and top talent in the business (Heron, 2009, p.4). It therefore highlights that talent management must be a part of any business HR strategy (Guthridge, Lawson & Komm, 2006, p.8) While Cappelli’s theories are a new look at a long term issue it would appear that most authors still support internal development managing talent but there is an opportunity to take into consideration the concepts of sharing the cost, extending development courses and allowing cross departmental appointments. The main ‘issue’ is to determine whether it is better (and cheaper) to develop from within or to appoint external new talent just-in-time.

This week I started thinking about team work after watching my son play basketball for his district team.

When I was watching my son I reflected on how much they had travelled to become a team in a really short timeframe. My boy is just 10 years old and his team were getting beaten comprehensively. But the boys didn’t give up. They tried new routines and kept persevering, eventually getting a basket and scoring. While the end score was a thrashing 66-8 the boys grew as a team and all improved and helped each other out.

Similarly in my team at work we have helped each other out in achieving our sales targets this year, even though it has been within a very hard ecomonic environment.

Katzenbach and Smith in ‘The Wisdom of Teams: Creating the High-Performance Organization’ (1992) investigate the lifecycle of a team. In analysis of this model I have compared the model and Sam’s basketball team:

The more a team moves towards high performance means that the team’s performance will increase as will their effectiveness. I have seen this in my son’s team over the summer and I can also see it in my work team since we formed. This is why it is so important that we reach high performance as it will impact on our sales result. The Team model follows (1992, p.17):

What resonated with me was that a real team works together to achieve the performance required. The high performance team takes this one step further, not only does a team of this calibre achieve the task, its output is better and that the team earns more success and growth as a result.

I am going to use my new knowledge on high performing teams to ensure that we all have personal growth and contribute to collective success of the budget achievement.

In this broad ranging article Sergio Marchionne reviews the turnaround at Fiat from a company that was near bankrupt to one considering the purchase of Chrysler in just 4 years. While there are a number of factors that have contributed to this success there are two strategic human resources management (SHRM) initiatives that have assisted. These are:
• Terminating the old management and replacing them with new, younger managers with a background in marketing, not engineering (Boss, 2009, p.48)
• Replacing the old managers and the ‘management by committee’ leadership style (Australian Financial Review, 2009, p.60) has changed the culture of Fiat to leadership characterised by autonomy and initiative (Boss, 2009, p.48).

Holmes, Schnurr and Marra (2008, p. 434) say that a change in top level management will also change workplace culture. This clearly occurred at Fiat when Marchionne changed the top managers. Gone is the CEO making all of the decisions to an organisation where everyone is expected to lead and to achieve their stretch targets (Boss, 2009, p. 48). This is supported by Yukl (2008, p. 716) who says that the CEO can’t be the only hero; a distributed leadership is required to achieve a high level of financial performance.

This change to top management occurred after just 60 days of Marchionne’s arrival (AFR, 2009, p. 60). These managers were replaced with a new generation of leaders mainly sourced from within the company, including consumer marketers and HR specialists. This is an example of SHRM and strategic planning in order to reshape Fiat and to change the culture for success. While on the surface it may appear harsh of Marchionne to terminate a large number of leaders within Fiat, this is becoming a common occurrence in other organisations throughout the world (Manderscheid & Ardichvili, 2008, p.113). One of the key strategies is placing the right leaders in the right positions (Manderscheid & Ardichvili, 2008, p.115) and the need for organisations to position and reposition leaders as required to stay competitive. Fiat needed to change the culture and achieved this through terminating old style managers in order to promote talent that could move Fiat towards profitability and survival.

Workplace culture has been defined as ‘the way we do things around here’ (Bower cited in Holmes et al, 2008, p. 435) and this definitely was the case at Fiat where leadership was management by committee. Marchionne has changed this by:
• Unlocking talent within the business and appointing new energetic leaders to top management roles
• Giving staff responsibility and holding them accountable (Boss, 2009, p. 48)
• Moving away from engineers in top roles and replacing them with marketers or external specialists (Boss, 2009, p. 48-49)
By making these changes Fiat’s new way of ‘doing things around here’ is now based on accountability, openness, communication, flexibility and sharing ideas (AFR, 2009, p. 60). This has allowed Fiat to reduce their time to market on a new vehicle from 4 years to just 18 months (Boss, 2009, p.48). This could only be achieved by changing the workplace culture.

Despite this success, not all is ‘rosy’ at Fiat. Marchionne says in Boss (2009, p.49) that being a leader at Fiat is ‘a lifestyle decision’. Leaders need to give up their time including weekends to attend meetings and therefore there is a lack of work-life balance for them. Fiat clearly requires their top talent to dedicate extraordinary amounts of time and resources to help drive the company. This could lead to reduced staff satisfaction and over time could increase staff turnover (Deery, 2008, p. 795). It also could be seen as discrimination against women or people with families (Stone, 2008, p.747). In contrast kindergartens and shops have been built near plants to assist front line staff to balance their lifestyle (BOSS, 2008, p.49). Marchionne could have also changed the culture by creating for Fiat a new set of values and goals that all employees and managers must religiously adhere (Freeman, 2009, p.47). Through a top down approach this would have resulted in a radical shift in employee and top management behaviour (Freeman, 2009, p.47) and may have caused less short term pain at Fiat than terminating top managers.

It is clear that Marchionne is driven to change Fiat and so far these strategies appear to be working. Fiat has a definite SHRM philosophy and has been able to change its culture. However, other aspects of employee relations such as leaders work-life balance are still very underdeveloped. This should be a focus of the HR Executive and CEO to prevent turnover of top talent and to encourage a more diverse range of people to apply for these positions at Fiat.